Business and Responsibility

Business as usual is going through the tougher path, but each month there is something to learn. This month i would like to share about the payment terms.

Startup normally get into the following problems:

1) No orders get them to desperate situation and agree for any small orders which is not the key area they should be focusing.
2) Payment terms would not be constant.
3) Payment collection can become a hassle
4) Practical issues would take up focus.

Solutions:

1) Always have cash flow which can take care of the company for 1 year even if there are no orders for the entire year. If there is no personal cash, look out for loans even though u do not need it the current month have it for 1 year, do not mind loosing interest. As important tasks would not be done without having the confidence of cash for operations.

2) Do NOT change payment terms for the sake of getting orders, as it is very bad for the company to grow, i have tried altering my company's payment terms for few customers and now after discussion with few big consultants i have framed a strong payment terms. Say u need 75% advance and 25% on installation/ supply be firm, even at the cost of order, as it will eventually lead to loss if we are not firm.

3) Follow up is mandatory for Payment collection in India, meaning when a customer is supposed to give you the payment on a particular day, be present on the day, any delay will lead to similar delays in all payment collection.

4) Do not Loose FOCUS, when practical day to day issues pop up, we tend to just keep on solving daily issue and loose our direction, i have recently spotted it and the only way to rectify is to finish day tasks at night and concentrate on Company;s direction during the normal office hours, if the cash flow is good please get people to handle the daily tasks.

Personally i am continuing my hard work, but financially its still a very long long way to go.